Several banking and finance regulations have been revoked and replaced by the Bank of Tanzania (BoT). These new regulations do not dramatically depart from the provisions of the old regulations, but they do introduce more stringent rules for banks and financial institutions in certain areas.

This month’s finance briefing will summarise some of the key changes which have taken place to matters concerning:

  • Foreign exchange exposures
  • Capital adequacy requirements
  • Financial disclosure obligations
  • The management of risk assets

Foreign exchange exposures

In our previous finance briefing, we highlighted the plight of the Tanzanian Shilling (TZS). Latest BoT exchange rates indicate that the TZS is trading at 2,178 to a single United States Dollar (USD), which is a sharp contrast to the rate in early January of TZS 1,738 to the USD.

Faced with increasing pressure to resolve the issue, the BoT has revoked the Banking & Financial Institutions (Foreign Exchange Exposure Limits) Regulations 2008 and put the Banking & Financial Institutions (Foreign Exchange Exposure Limits) Regulations 2014 (the Foreign Exposure Regulations) in their place.

Although the Foreign Exposure Regulations do not substantively change the provisions of the 2008 regulations, they have introduced additional obligations on banks and financial institutions, namely:

  • Requiring that foreign exchange policies be submitted to the BoT for frequent reviews
  • Requiring that intra-day foreign exchange exposure limits be set and observed

Capital adequacy requirements

The main objective of the Banking & Financial Institutions (Capital Adequacy) Regulations 2014 (theCapital Adequacy Regulations) is to ensure that banks and financial institutions maintain a level of capital which can protect them from the losses that arise out of their business activities.

Like the Foreign Exposure Regulations, the Capital Adequacy Regulations are a replacement to the 2008 regulations of the same name. It is worth noting, however, that the BoT is giving a 3-year moratorium to banks and financial institutions to comply with the new requirements under the Capital Adequacy Regulations.

Some of the key changes are as follows:

Click here to view table.

Financial disclosure obligations

The main objective of the Banking & Financial Institutions (Disclosures) Regulations 2014 (theDisclosures Regulations) is to ensure that banks and financial institutions maintain a level of transparency which will enable depositors, creditors and the public to make informed decisions.

The Disclosures Regulations replace the Banking & Financial Institutions (Publication of Financial Statements) Regulations 2008.

Some of the key changes are as follows:

Click here to view table.

The management of risk assets

The main objective of the Banking & Financial Institutions (Management of Risk Assets) Regulations 2014 (the Risk Management Regulations) is to ensure that banks and financial institutions have adequate credit and investment policies to identify and manage business risks.

The Risk Management Regulations revoke the 2008 regulations of the same name.

Some of the key changes are as follows:

Click here to view table.